Synopsis: Student loans. Permits the Indiana Secondary Market for
Education Loans, Inc. to become a direct lender of postsecondary loans.
Allows the board of directors of the corporation to meet in executive
session to protect proprietary business information. Repeals the
secondary market sale fund.

Effective: Upon passage.

Lubbers, Simpson

January 9, 2006, read first time and referred to Committee on Education and Career
Development.
January 19, 2006, reported favorably _ Do Pass. Reassigned to Senate Committee on
Appropriations.
January 26, 2006, reported favorably _ Do Pass.

January 27, 2006

Second Regular Session 114th General Assembly (2006)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in thisstyletype.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or thisstyletype reconciles conflicts
between statutes enacted by the 2005 Regular Session of the General Assembly.

SENATE BILL No. 230

A BILL FOR AN ACT to amend the Indiana Code concerning
education.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 20-12-21.2-1; (06)SB0230.1.1. -->
SECTION 1. IC 20-12-21.2-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. As used in this
chapter:
(1) "corporation" refers to the corporation designated by the
governor under section 2 of this chapter;
(2) "education loan" means a loan insured or guaranteed under a
federal or state program or a program of private insurance that is
made to assist a student in obtaining postsecondary education and
is:
(A) made to any Indiana student, or either one (1) or both
parents or the legal guardian of the student, for the purpose of
attending an Indiana or non-Indiana institution;
(B) made to any non-Indiana student, or one (1) or both
parents or the legal guardian of the student, for the purpose of
attending an Indiana institution or non-Indiana institution;
or
(C) made or owned by any lending institution with offices or

by any lending institution whose affiliate has an office located
in Indiana or in a state in which an Indiana bank or an Indiana
bank holding company is entitled under Indiana law to acquire
a bank or bank holding company;
(3) "lending institution" means an institution that makes or holds
education loans; and
(4) "federal program" means any program operated by the United
States Secretary of Education under which the United States
Secretary of Education provides guarantees or reinsurances of
loans made to students or to either one (1) or both parents or the
legal guardians of the students for the purpose of assisting
students in obtaining postsecondary education.

SOURCE: IC 20-12-21.2-3; (06)SB0230.1.2. -->
SECTION 2. IC 20-12-21.2-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) The
corporation must, under its articles of incorporation, limit its powers to
those described in subsection (b).
(b) The corporation may:
(1) borrow money;
(2) purchase, sell, and retire education loans, if the loans are not
in default status;
(3) provide incentive services and payments, such as the payment
of premiums for the purchase of education loans and the payment
of an origination fee, to assist lending institutions that provide
education loans;
(4) loan funds to lending institutions if:
(A) the lending institution agrees to use the funds to originate
education loans of an amount equal to the loan made by the
corporation over a period agreeable to the corporation and to
grant the corporation the right of first refusal to purchase those
education loans;
(B) the lending institution agrees to use education loans or
government securities as collateral for the loan; and
(C) the corporation has, in response to its written request,
received written authorization from the governor to exercise
the power described in this subdivision;(5)establishafterconsultationwiththeassociationsrepresentingtheprivatelendersofthestateand,atthedirectionofthegovernor,adirectlendingprogramunderwhichthecorporationmaymakeeducationloanstoeligibleborrowersunderafederalprogramifthecorporationdeterminesthattheborrowerscannotreasonablyobtainaneducationloanfromalendinginstitutioninIndiana;(6) (5) make direct loans to or for the benefit of an education loan
borrower; forthepurposeofconsolidatingalloraportionoftheborrower'soutstandingeducationloansintoone(1)loan;(7) (6) operate a secondary market for postsecondary education
finance instruments, including tuition certificates and education
savings certificates sold by or offered through lending institutions
or educational institutions; and(8) (7) do all other things that are necessary or incidental to
performing the functions listed in subdivisions (1) through (7). (6).
(c) The corporation shall submit an annual report to the governor,
which must include detailed information on the structure, operation,
and financial status of the corporation. The corporation shall conduct
an annual public hearing to receive comment from interested parties
regarding the report. Notice of the hearing shall be given at least
fourteen (14) days prior to the hearing in accordance with
IC 5-14-1.5-5(b).
(d) The corporation shall provide in its articles of incorporation that
changes in the composition of its directors or in its bylaws are subject
to the approval of the governor.
(e) The corporation is subject to an annual audit by the state board
of accounts. The corporation shall bear the full costs of this audit.
(f) The board of directors of the corporation may meet in executive
session to do any of the following: (1) Discussnegotiating strategies with respect to financing
arrangements or proposals, in addition to those items listed in
IC 5-14-1.5-6.1. (2) Discuss, prepare bids, or respond to proposals or
arrangements for raising capital or acquiring assets.
(3) Discuss and prepare competitive marketing strategies.
(4) Engage in strategic planning.
(g) Any or all members of the board of directors may participate in
a meeting of the board by means of a conference telephone or similar
communications equipment by which a member can communicate with
each of the other board members if at least three (3) board members are
present at the meeting. Participation by these means does not violate
IC 5-14-1.5.
(h) The corporation and its transferees and pledgees, so long as they
are eligible lenders under a federal program, are entitled to the benefits
of any guaranty given by the state student assistance commission under
IC 20-12-21.1 or any successor to the state student assistance
commission with respect to education loans owned or held by the

corporation, its transferees, or its pledgees, as long as the corporation,
its transferees, or its pledgees are eligible lenders or holders of
education loans under the rules adopted under IC 4-22-2 by the state
student assistance commission or a successor to the state student
assistance commission.
(i) Notwithstanding any other law, the commission corporation
may not make grants for any purpose without approval by the budget
agency and the governor after review by the budget committee.